Question

In this discussion forum share how interest rate changes affect your company/industry.

Answer 1

Let us say I have a cab business.

I have taken 5 taxis on loan from the local bank. My ability to pay back the loan amount along with the interest rate is entirely dependent on how my business performs.

However, the largest cost that my company incurs is on monthly payment of loan amount to the bank.

If my monthly payment to the bank is $10,000 when the interest rate is 5% per annum.

Now, if the bank lowers the interest rate to 4.5%, my monthly payment to the bank decreases and my company's financials would be better off than before. Likewise, if the interest rate increases, my monthly liability to the bank will increase leading to pressure on the financials of my company.